Business

Moon Jae-in’s nuclear gamble

An ambitious energy plan leads to political fallout

Oct 30,2017

Tensions were high in the National Assembly last Tuesday as lawmakers debated the government’s plan to abandon nuclear energy. Earlier in the day, Moon Jae-in’s administration had announced a road map for phasing out nuclear power, pledging to reduce the number of reactors in the country from the current 24 to 14 by 2038. This would involve scrapping plans for six new reactors.

Opposition parties argued that abandoning the plans would incur a financial loss of 3 trillion won ($2.7 billion) already invested in the projects. Kwak Dae-hoon, a lawmaker from the Liberty Korea Party, chastised the government for not considering the economic impact of canceling the projects.

On the other side, lawmakers from Moon’s party, the Democratic Party, accused Korea Hydro and Nuclear Power, the state-run nuclear power plant operator, of rushing construction in four ongoing nuclear projects to prevent the government from withdrawing the projects.

“When the cost of managing spent nuclear fuel is expected to reach an astronomical 64 trillion won by 2053, there’s a problem in simply asking for additional nuclear power plants,” said Hong Eui-rak, a Democratic Party lawmaker.

The administration’s announcement came just days after a state commission recommended the government resume construction of two controversial nuclear reactors known as Shin Kori 5 and 6. President Moon had suspended their construction in June to let a commission deliberate on whether the project should continue. The commission convened a panel of 471 people randomly selected by a polling firm and consisting of no nuclear experts to vote on the issue. The panel cost taxpayers an estimated 4.6 billion won.

The panel voted overwhelmingly in favor of resuming construction, with 59.5 percent in favor and 40.5 percent against. But in a separate survey on whether Korea should continue its dependence on nuclear energy, 53.2 percent were in favor of cutting back on nuclear reactors, while 35.5 percent were satisfied with the status quo and only 9.7 percent wanted more reactors. The Moon administration has used these statistics to bolster its argument for a nuclear-free Korea.

Korea is no stranger to fierce debates on energy policy - one only needs to look at the fracas every year over electricity bills - but none have been as intense as the recent fights over nuclear energy because their conclusion could determine the nation’s economic future.

While those who support a nuclear phase-out have stressed the importance of public safety, citing the Fukushima Daiichi meltdown in Japan after the 2011 tsunami, those against the phase-out say abandoning nuclear power will deal a blow to the country’s energy supply and hurt the economy.

The past four months that the commission has spent deliberating on the Shin Kori projects have been especially tense. Residents living in the vicinity of the reactors, who stand to benefit from the added jobs, took their protest to Korea Hydro and Nuclear Power, urging the operator to continue the project, and even engineering students at Seoul National University rallied against the government. Few policies have been as divisive as the one on nuclear energy.

Renewable alternatives

President Moon Jae-in has pledged to replace nuclear power with safer and greener renewable sources as well as liquefied natural gas. His target is to raise the portion of energy supply taken up by renewables from the current 5 percent to 20 percent by 2030.

Kim Jin-woo, a Yonsei University economics professor who leads a commission overseen by the Ministry of Trade, Industry and Energy that gives reviews and recommendations on energy management, believes this is possible. “The country needs to construct new power plants with between five- to 10-gigawatt capacity by 2030, and I think we can do it through liquefied natural gas and renewable energy.”

Yang-yi Won-young, head of the nuclear energy and climate change department at the Korea Federation of Environmental Movements, said developed countries around the world have been increasing their reliance on renewable energy and cutting back on nuclear power even before the Fukushima Daiichi disaster in 2011.

She noted that in the past decade, the global solar energy market has seen average annual growth of 49 percent, and wind power enjoyed 21 percent growth. As a result, she said, global renewable energy capacity as of last year accounts for 24.5 of all energy generated.

“Since it takes 10 years to build nuclear power plants, the market for new nuclear reactors is only about 60 trillion won and is limited to only several countries,” Yang-yi said, “whereas renewable energy is a 300 trillion won market that is spread across the world.”

She also stressed the benefits of renewable energy in job creation, pointing out that while solar energy capacity currently only accounts for 6 percent of overall global energy, it provides 30 percent of energy jobs.

Supporters of a nuclear phase-out are particularly concerned about the exposure to risks like natural disaster-induced fallout. Fukushima and Chernobyl come to mind, but the situation in Korea is even more dire because the population living around nuclear reactors is denser. Roughly 3.8 million people live within 30 kilometers (20 miles) of the Kori nuclear reactors, including 2.5 million Busan residents. By comparison, about 170,000 Japanese lived within 30 kilometers of the Fukushima plant.

During a meltdown, 30 kilometers is the range in which radioactive elements are considered dangerous, possibly deadly.

Such fears were compounded last year when a 5.4-magnitude earthquake struck Gyeongju, North Gyeongsang, not far from some of the country’s reactors. The earthquake was the strongest since 1978, when the country began recording earthquakes, and shook the Korean public, who previously thought the country was safe from natural disasters of such scale.

The case for nuclear energy

Replacing nuclear power with renewable energy is an ambitious undertaking. Nuclear reactors are currently the second-largest source of energy in Korea after thermal power generated from burning coal. These two sources alone account for 70 percent of the energy generated in the country, while renewables only account for 4.8 percent.

Reducing nuclear energy is expected to increase the financial burden on companies that depend on industrial power, especially small and medium-sized ones. Industry is the biggest consumer of energy, accounting for 54.3 percent, while residential use only takes up 13.3 percent.

Nuclear energy is currently far cheaper than renewable energy, as it only costs 67.9 won to producing a single kilowatt-hour compared to 186.7 won for renewable energy. The Korea Energy Economic Institute estimates that power costs will go up by 21 percent from last year’s figures to 11.6 trillion won if all nuclear projects are canceled, thermal power plants are shut down and a fifth of the energy supply turns to renewable energy.

The think tank’s estimate also takes into account the cost of liquefied natural gas, which typically follows global crude trends. The 11.6 trillion won evaluation was made based on international crude prices averaging $43.4 per barrel last year. If that goes up to $70 per barrel, the costs would rise to 13.4 trillion won. At $100 per barrel, the costs would move up to 15.7 trillion won.

The think tank also estimated that when energy costs go up by 20 percent, consumer prices will rise between 0.46 and 1.16 percent and GDP will shrink 0.7 to 0.93 percent.

Experts also dispute the practicality of renewable energy in Korea. During a visit to Korea earlier this month, Michael Shellenberger, founder and president of Environmental Progress, a clean energy group, said that in order for the country to completely replace its current energy production with solar, it would require land that is seven times that of Seoul. He added that replacing nuclear power with liquefied natural gas would produce more carbon emissions.

Opportunity costs

Despite its plan to phase out nuclear power in the country, President Moon Jae-in has repeatedly stressed that it will continue to support exporting Korea’s nuclear power technology and finding new markets for dismantling nuclear power plants.

But while the administration has made that promise, it’s showing reluctance to get behind it. The city of Gyeongju, North Gyeongsang, recently hosted a biennial meeting of the World Association of Nuclear Operators, where 500 nuclear industry experts and leaders from around the world attended, but the government kept a low profile on the event. It was hardly advertised and not even the energy minister attended.

Political observers interpreted the snub as a message that the administration remained committed to moving away from nuclear energy. Even after Korea earned a European certification earlier this month to sell its nuclear power technology, the government remained mum. The certification opens up Korea to export markets not just in Europe but also South Africa and Egypt, where the certification is used.

Experts say Korea’s nuclear technology has made huge strides in the past decades, considering how much the country lacks in natural resources. Since the 1950s, the government has been sponsoring students to study nuclear energy in the United States and Europe, even when the country’s GDP per capita at the time was just $70.

The efforts began to bear fruit in 1977 with the construction of the country’s first commercial nuclear power plant, Kori 1. In 2005, Korea built its first nuclear power plant using completely indigenous technology, and in 2009, the country reached another milestone when it signed a $18.6 billion deal to build a nuclear reactor in the United Arab Emirates. It was the first time Korea was able to fully export a nuclear power plant made from its own technology.

Thanks to the continuous government support and aggressive investment in nuclear technologies, the sector has become lucrative for Korea. In the last decade, the local nuclear industry’s revenue has averaged 8.5 annual growth percent to reach 26.6 trillion won by 2015. The number of people employed in the industry saw average annual growth of 5.8 percent to reach 35,330 in 2015, and Korea has exported $150 million worth of nuclear energy technologies.

But with the current government reluctant to continue support for the industry, there is increasing concern that the opportunities will go to other countries.

“The countries that export nuclear plants in the world are only a handful ? U.S., China, Russia, France, Japan, Canada and Korea,” said Suh Kun-yull, a nuclear engineering professor at Seoul National University. “Although the government said it will be helping nuclear power plant exports, the decision to no longer build nuclear reactors will actually block such attempts. This is a very wrong energy policy.

“We will be losing our chances to China and Russia,” he said.

Energy needs

Regardless of whether the country moves toward nuclear power or renewable energy, the government will need to invest in a reliable and affordable energy regiment, said Heo Eun-nyeong, a professor of energy systems engineering at Seoul National University.

“Korea was able to catch up to advanced economies as it moved quickly in establishing [energy] infrastructure,” Heo said. “Between the 1950s and 1980s, Korea was one of the world’s fastest countries in investing in energy infrastructure. Even though the energy industry didn’t profit from it, the relatively low energy supply became the foundation in raising the nation’s industrial competitiveness.”

The rapid development of advanced technologies like artificial intelligence or big data especially demands solutions to the energy problem, he said.

“Industry experts say if we continue to use the equipment needed for advanced technologies such as big data, they say it would need to build 100 million or more thermal power plants for a steady supply,” Heo said. “If not, there’s no need to discuss artificial intelligence.”